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equity on June 30, 2005 comprised the following: By what
amount should Vail's retained earnings decrease as a result of
issuance of the stock rights on July 1, 2005?
Question 8
On January 1, 2005, Wolf Corp. issued its 10% bonds in the
face amount of $1,000,000, which mature on January 1,
2015.The bonds were issued for $1,135,000 to yield 8%,
resulting in bond premium of $135,000. Wolf uses the effective
interest method of amortizing bond premium. Interest is
payable annually on December 31. At December 31, 2005,
Wolf's adjusted unamortized bond premium should be
Question 9
Earl was engaged by Farm Corp. to perform consulting
services. Earl's compensation for these services consisted of
1,000 shares of Farm's $10 par value common stock, to be
issued to Earl on completion of Earl's services. On the
execution date of Earl's employment contract, Farm's stock
had a market value of $40 per share. Six months later, when
Earl's services were completed and the stock issued, the stock's
market value was $50 per share. Farm's management
estimated that Earl's services were worth $100,000 in cost
savings to the company. As a result of this transaction,
additional paid-in capital should increase by
Question 10
During 2005, Eddy Corp. incurred the following costs in
connection with the issuance of bonds: What amount should be